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Published by Sthita Patnaik, 2019-11-01 08:27:45

Module_12

Module_12

MODULE 12
COMPETITON COMMISSION AND SECTORAL REGULATORS

INTRODUCTION:

Before the opening up of the economy, economic activity was mainly dominated by the
government-owned companies. Apart from economic activities government also controlled,
most of the factors that determine the level of competition in the economy, such as entry,
price, scale, location, etc. For example, telecommunication services, oil exploration, drilling,
refining and marketing were a government monopoly. Other sectors such as banking and
electricity were also dominated by government undertakings. This situation did not call for
independent regulators as government was generally believed to be acting in the interest of
the public, however, the pattern changed significantly with new economic reforms which
changed the manner in which business was conducted.
The process of globalization and liberalization has brought a considerable awareness towards
improving the competitive process in developing economies such as India. Until recently,
most of the developing countries have operated without a structured competition policy and
have justified the interventions by the state over economic activities. Following a structural
adjustment program in 1991, India embarked on the path of market liberalization, and
consequently it increasingly relies upon market rivalry as the organizing principle for
economic activity. As a result of these the need of having sectoral regulators became
apparent. This led to setting up of many sectoral regulators. The
telecommunications regulator, the Telecom Regulatory Authority of India (TRAI), was set up
in 1997, Petroleum and Natural Gas Regulatory Board (PNGRB) in 2006, Airports Economic
Regulatory Authority (AERA) was established in 2008, Securities and Exchange Board of
India (SEBI) was set up in 1992, Central Electricity Regulatory Commission (CERC) was
constituted in 1998, etc. While these regulatory bodies were being set up to tackle various
issues emanating from actual and anticipated private player behaviour and other structural
issues, the same concerns were also felt about the competition arena. This led to the setting
up of the Competition Commission of India.

Regulatory Bodies in India, a brief recap:

The history behind Indian strand of regulation has a close connection with the initiation of the
process of liberalization, privatization and globalization in 1991. Gradually it was also
realized by the government that it needs to focus on governance.
Along with this realization, the Indian legal system has been characterized by a sudden
proliferation in the birth of regulatory authorities. One of the first regulatory authorities in
India, consequent upon securities scandal was the Securities and Exchange Board of India
(“SEBI”) through the Securities and Exchange Board of India Act, 1992 (“SEBI Act”).
Globally, it is understood that pursuant to emergence of a “risk society”, there has been rise
of a new regulatory state. India is no exception to that. There have been unpredictable
scandals during this period of fast and robust growth. This has ensured that governmental
approach to regulation is ostensibly paradoxical. While liberalization process of the
government meant cutting through the red-tape and making industrialization more
entrepreneur-friendly, there has been emergence of independent regulatory authorities for
several sectors of the economy.
Post 1991, LPG reforms have indeed opened our doors. The need for a regulatory body has
arisen out the ever increasing is issues in sectors, whether they are primary, secondary or
tertiary and have substantial economic impact. Hence the need for regulatory authorities to
control the pace of functioning, penalise malpractices, create uniformity but most
importantly, to create a conducive and customer friendly sector.
In the case of Shyamlal Lajwanti Devi Kukreja vs, The State of Madhya Pradesh1, the court
had explained in a elaborate manner the economic history of the nation and has conclusively
stated the imminent need for a regulatory authority in India for various sectors. The excerpt
has been stated below,

“74. Regulatory mechanism, or what is called regulatory economics is the order of the day.
In last 60-70 years, economic policy of this country has travelled from laisse faire to mixed
economy to the present era of liberal economy with regulatory regime. With the advent of
mixed economy, there was mushroom of public sector and some of the key industries like
Aviation, Insurance, Railways, Electricity/Power, Telecommunication, etc. were monopolized
by the State. License/permit raj prevailed during this period with strict control of the
Government even in respect of those industries where private sectors were allowed to
operate.

1 W.P.2450/2012, 13 May 2015, Madhya Pradesh High Court

However, Indian economy experienced major policy changes in early 90s on LPG Model, i.e.,
Liberalization, Privatization and Globalization. With the onset of reforms to liberalize the
Indian economy in July of 1991, a new chapter has dawned for India. This period of
economic transition has had a tremendous impact on the overall economic development of
almost all major sectors of the economy.

75. When we have liberal economy which is regulated by the market forces (that is why it is
also termed as market economy), prices of goods and services in such an economy are
determined in a free price system set up by supply and demand. This is often contrasted with
a planned economy, in which a Central Government determines the price of goods and
services using a fixed price system. Market economies are also contrasted with mixed
economy where the price system is not entirely free but under some Government control or
heavily regulated, which is sometimes combined with State led economic planning that is not
extensive enough to constitute a planned economy.

76. With the advent of globalization and liberalization, though the market economy is
restored, at the same time, it is also felt that market economies should not exist in pure form.
Some regulation of the various industries is required rather than allowing self-regulation by
market forces. This intervention through Regulatory bodies, particularly in pricing, is
considered necessary for the welfare of the society and the economists point out that such
Regulatory economy does not rob the character of a market economy which still remains a
market economy.

Justification for Regulatory bodies even in such industries managed by private sector lies in
the welfare of people. Regulatory measures are felt necessary to promote basic well-being for
individuals in need. It is because of this reason that we find Regulatory bodies in all vital
industries like, Insurance, Electricity & Power, Tele-communications, etc.

77. Thus, it is felt that in any welfare economy even for private industries, there is a need for
Regulatory body, such a Regulatory framework for education sector become all the more
necessary.”

Hence, through the above case law, it is evident that a regulator focuses upon orderly
development of a sector that would presumably trickle down in a sector ensuring consumer
welfare, focuses upon specific sectors of the economy, instructs businesses on “what to do”
and “how to price products”, works “Ex ante” i.e. addresses behavioural issues before
problem arises. In a nutshell, this is how a sectoral regulator works.

On the other hand, the Competition Commission of India based on the long title of as stated
here, "An Act to provide, keeping in view of the economic development of the country, for the
establishment of a Commission to prevent practices having adverse effect on competition, to
promote and sustain competition in markets, to protect the interests of consumers and to
ensure freedom of trade carried on by other participants in markets, in India, and for matters
connected therewith or incidental thereto.” May be similar in some ways but there are still
obvious differences between the two.

Based on the functionality, the Commission, focuses upon the entire economy and
functioning of the market, works Ex post i.e. addresses behavioural issues after problem
arises and the legislation is usually more appropriate for affecting conduct and maintaining
competition.

Thus, there is indeed an obvious difference between the two but at the same time there are
similarities or overlaps in the functioning of the two bodies. There are areas of overlaps
between the competition authority and the sector regulators. Overlaps are expected to either
give rise to conflicts on the part of stakeholders or confusion on the part of the regulated
companies and consumers as they struggle to know which regulator is best suitable to deal
with their grievances. In addition, this gives rise to forum shopping, delays and multiplicity
of proceedings resulting in conflicting views of two regulators. Since the competition
authorities and the sector regulators have been co-existing for a while now, it is important to
assess whether there have been any problems.

For example, the banking sector. The banking sector is a sector that is regulated by the
Reserve Bank of India. RBI can be regarded as the most important regulator in the economy,
given the critical role that the banking sector plays in the economy. As the banking sector is
widely recognised as more ‘special’ compared to other sectors these ‘special’ characteristics

are normally given as the basis for the need for a different approach for the sector in
comparison with others. This results in central banks playing roles which also affect and
overlap with those of competition authorities.

RBI would thus be expected to ensure that they constantly check the vulnerability of banks,
as they are constantly exposed to risks through borrowings. RBI also has to ensure that, as the
banks source money for lending by pooling short-term demand deposits (which they invest in
long-term loans), they fund only viable projects for which there would be return, given that
the money loaned out would be belonging to various creditors. In addition, the bank has to
constantly check for a possible mismatch between the maturity of the bank’s assets and
liabilities, which could make the banks prone to a constant threat of bank runs. This results in
interventions and directions having implications on competition.

Now, having laid the background for the Competition Commission and Sectoral Regulators,
it is only pertinent to see haw the Competition Commission and various Sectoral Regulators
have co-existed with one another in the past few years.

• Telecom Regulatory Authority of India and The Competition Commission Of
India

The telecom sector in India is primarily regulates by the Telecom Regulatory Authority of
India (TRAI). The governing legislation is the TRAI Act, 1997. The long title of the Act,
goes as follows,

“An Act to provide for the establishment of the1 [Telecom Regulatory Authority of India and
the Telecom Disputes Settlement and Appellate Tribunal to regulate the telecommunication
services, adjudicate disputes, dispose of appeals and to protect the interests of service
providers and consumers of the telecom sector, to promote and ensure orderly growth of the
telecom sector,] and for matters connected therewith or incidental thereto.”

From this, it is evident that the TRAI has been set as a regulatory body to govern any issues
pertaining to the telecom sector and will be an adjudicatory body comprising of a chairperson

and not more than 2 whole time members and also not more than 2 time member appointed
by the government.[Section 3(3)].

For the benefit of the readers, it is pertinent to firstly refer to Section 11 of this act which
talks about the “functions of the authority.” Under this section, functions such as ensure
technical compatibility and effective inter-connection between different service
providers(11(1)(b)(3), regulate arrangement amongst service providers of sharing their
revenue derived from providing telecommunication services(11(1)(b)(4), lay-down the
standards of quality of service to be provided by the service providers and ensure the quality
of service and conduct the periodical survey of such service provided by the service providers
so as to protect interest of the consumers of telecommunication service(11(1)(b)(5). Etc. are
some of its regulatory functions.

This has been stated to give you an overview as to how the TRAI works. But now to bring to
light, the provision which have a relationship with the Competition Act. The Competition Act
was born out of an act called the Monopolies and Restrictive Trade Practices Act,
1969(MRTP). This act too had similar objectives as the Competition Act which it was
replaced by. In Section 14 of the TRAI Act, there is a mention of an Appellate Tribunal. The
section talks about the disputes that the Tribunal may look into. But what matters is the
exception it makes for the MRTP Act. It states as follows,

“PROVIDED that nothing in this clause shall apply in respect of matters relating to –

(A) the monopolistic trade practice, restrictive trade practice and unfair trade practice which
are subject to the jurisdiction of the Monopolies and Restrictive Trade Practices Commission
established under sub-section (1) of section 5 of the Monopolies and Restrictive Trade
Practices Act, 1969”

In the instant scenario the true beauty of Legislative creation can be seen. Although, yes,
there have been skirmishes between the telecom regulator and the CCI, this section does
mention that it excludes competition matters and leaves it to the wisdom of the CCI to
adjudicate upon matters of Competitive nature. The TRAI Act, is one such legislation that has
clear functions stated in Section 11(refer above) and specifies matters that it has complete
interest on. In spite of the clarity expressed here, it is to be illustrated through case laws on
the ambiguity the courts have found and how they have interpreted the same.

In the case of Consumer Online Foundation vs Tata Sky & Ors2, the opposing party had
stated that the Commission did not have the power to adjudicate on the matter by stating the
following,

“11.2 The answering opposite party has also raised an objection that the Commission does
not have the jurisdiction to entertain the present complaint. It has been submitted that the
complaint in hand pertains to the issues relating to the regulatory positions in the
telecommunication and broadcasting industry for which a specific statutory authority has
been created and formed under a separate legislation, viz., the Telecom Regulatory Authority
of India Act, 1997 has established the Telecom Regulatory Authority of India (TRAI) which
has been vested with the jurisdiction and responsibility to govern and regulate the
telecommunication industry covering telecom, broadcasting and cable TV services which,
inter alia, include DTH Broadcasting Services and the jurisdiction to entertain/settle/ resolve
any dispute arising out of the same vests with the Telecom Disputes Settlement and Appellate
Tribunal (TDSAT) created by the said statute.”

The Commission rejected this argument and went on with the matter finding the opposing
party in contravention of Section 3 of the Competition Act. In an analysis of this case law, the
issue is a subject matter of the TRAI but the CCI rejected to perceive it the same way.

Similarly, in the case of Competition Commission of India vs Bharat Sanchar Nigam
Limited3, the relationship between TRAI and CCI was beautifully established as follows,

“102. Obviously, all the aforesaid functions not only come within the domain of the CCI,
TRAI is not at all equipped to deal with the same. Even if TRAI also returns a finding that a
particular activity was anti- competitive, its powers would be limited to the action that can be
taken under the TRAI Act alone. It is only the CCI which is empowered to deal with the same
anti-competitive act from the lens of the Competition Act. If such activities offend the
provisions of the Competition Act as well, the consequences under that Act would also follow.
Therefore, contention of the IDOs that the jurisdiction of the CCI stands totally ousted cannot
be accepted. Insofar as the nuanced exercise from the stand point of Competition Act is
concerned, the

2 Case No. 2 of 2009, March 2011
3 2018 SCC Online SC 2678

CCI is the experienced body in conducting competition analysis. Further, the CCI is more
likely to opt for structural remedies which would lead the sector to evolve a point where
sufficient new entry is induced thereby promoting genuine competition. This specific and
important role assigned to the CCI cannot be completely wished away and the comity'
between the sectoral regulator (i.e TRAI) and the market regulator (i.e the CCI) is to be
maintained.

103. The conclusion of the aforesaid discussion is to give primacy to the respective objections
of the two regulators under the two Acts. At the same time, since the matter pertains to the
telecom sector, which is specifically regulated by the TRAI Act, balance is maintained by
permitting TRAI in the first instance to deal with and decide the jurisdictional aspects which
can be more competently handled by it. Once that exercise is done and there are findings
returned by the TRAI which lead to the prima facie conclusion that the IDOs have indulged in
anti-competitive practices, the CCI can be activated to investigate the matter going by the
criteria laid down in the relevant provisions of the Competition Act and take it to its logical
conclusion. This balanced approach in construing the two Acts would take care of Section 60
of the Competition Act as well.”

This harmonious view is the ideal world scenario of law we aspire to have. To believe that
both legislations have a specified boundary and if one cannot deal with the matter in its
entirety, then it looks at the other for assistance.

In conclusion to this discussion, the Apex Court in the case of Competition Commission of
India vs Bharti Airtel Ltd4, had keeping in mind the importance of both acts stated as follows,

“91) The conclusion of the aforesaid discussion is to give primacy to the respective
objections of the two regulators under the two Acts. At the same time, since the matter
pertains to the telecom sector, which is specifically regulated by the TRAI Act, balance is
maintained by permitting TRAI in the first instance to deal with and decide the jurisdictional
aspects which can be more competently handled by it. Once that exercise is done and there
are findings returned by the TRAI which lead to the prima facie conclusion that the IDOs
have indulged in anti-competitive practices, the CCI can be activated to investigate the

4 CIVIL APPEAL NO(S). 11843 OF 2018, 5 December 2018

matter going by the criteria laid down in the relevant provisions of the Competition Act and
take it to its logical conclusion. This balanced approach in construing the two Acts would
take care of Section 60 of the Competition Act as well.”

Thus the TRAI Act and The Competition Act do have overlapping functions and similar
objectives but the transition to an era where both acts will be admired for their unique
differences and exclusivity is not far away.

• The Petroleum and Natural Gas Regulatory Board and The Competition
Commission of India

Firstly, it must be understood as what why the Petroleum and Natural Gas Regulatory Board
(PNGRB) has come into existence. As per the long title of the Act the purpose is as stated
under,

“An Act to provide for the establishment of Petroleum and Natural Gas Regulatory Board to
regulate the refining, processing, storage, transportation, distribution, marketing and sale of
petroleum, petroleum products and natural gas excluding production of crude oil and natural
gas so as to protect the interests of consumers and entities engaged in specified activities
relating to petroleum, petroleum products and natural gas and to ensure uninterrupted and
adequate supply of petroleum, petroleum products and natural gas in all parts of the country
and to promote competitive markets and for matters connected therewith or incidental
thereto.”

From this long title, it becomes evident that the regulatory board in this instance regulates all
the processes pertaining to petroleum, its products and natural gas excluding production of
crude oil and natural gas. This is to be construed as the subject matter of the Act.

The legislative Overlap: In this scenario, the legislative overlap may be seen in Section 11(a)
which states,
“11. Functions of the Board:-
The Board shall-

(a) protect the interest of consumers by fostering fair trade and competition amongst the
entities”
Once this section has been read and dissected, it is to be noted that the functions so stated
under this section are indeed the objectives of the Competition Act. Hence it becomes very
evident that there indeed is a legislative overlap where sections with similar intentions and
objectives have been stated in two legislations where the subject matter is different.

In the case of Gujarat Textile Processors Association vs Gujarat Gas Company Ltd5, the
Courts had analysed the conflicting nature of both legislations and had laid out the following
rule,

“11. Section 4(1) of the Competition Act puts an obligation on the Competition Commission
to ensure that no dominant enterprise abuses its dominant position. Section 4(2) of the
Competition Act provides as to under what circumstances abuse of dominant position by an
enterprise can arise. 12, Where an enterprise directly or indirectly imposes unfair and
indiscriminatory condition in the sale, purchase and pricing of goods or services, amounting
to abuse of its dominant position. CCl has to act under the Competition Act. However, in the
present case the legislature has created a separate regulator for goods and services being
provided by the opposite party and the separate regulator has to ensure not only adoption of
fair practices by the opposite party but has also to monitor price and take corrective
measures to check the enterprise from becoming unfair to consumers and to see that it
complies with provisions of PNGR Board Act.

13. It is settled law that where a special law has been enacted by the Parliament for a
subject, general law will have no application.

14. Since PNGRB Act is a special legislation for regulating the price mechanism and to
ensure fair trade and competition among the entities, the Competition Act cannot be invoked
complaining increase in price or unfair .”

Through this case, the Commission had made way for the PNGRB to act as per its procedures
and guidelines as it was not an instance of abuse of dominant position. Hence a clear

5 Case No. 50/2011, 21 December 2011

demarcation may be observed in this case. In a more recent judgement, the courts have gone a
step further in explaining the same stated above. In the case of Xyz vs Indian Oil Corporation
Ltd. & Ors6, the Opposing party had stated that the Commission did not have jurisdiction to
try the matter. Their contention was as follows,

“23. The PNGRB Act provides for the establishment of PNGRB and vests it with the power to
regulate petroleum, petroleum products, and natural gas, including the power to promote
competitive markets. The OPs also emphasised upon various provisions of the PNGRB Act,
including Section 1(4)7, Section 2(zi), Section 11, Section 12, Section 24, Section 25, Section
26, Section 28, Section 50 etc., to argue that PNGRB Act is a complete code in itself and it
seeks to deal with all issues relating to petroleum products and natural gas. It was also
contended that these provisions of the PNGRB Act abundantly show the intention of the
legislature to empower/enable PNGRB to deal with every issue arising in the sector,
including those pertaining to anti-competitive conduct.”

But the above argument was side-lined by the Commission and a “co-existence” approach
was taken by the Commission. The Commission had stated as follows,

“29. The Commission has considered the arguments raised by the OPs in support of their
objection to the jurisdiction of the Commission. In the case of In Re: HPCL- Mittal Pipelines
Limited and Gujarat Energy Transmission Corporation Limited & Ors. (Case No. 39 of
2017, decided on 31st January 2018) (hereinafter, the 'HPCL case'), the Commission dealt
with a similar issue in the electricity sector, in detail. The Commission relied upon the
decision of Hon'ble Supreme Court in Ashoka Marketing Limited v. Punjab National
Bank [(1990) 4 SCC 406], wherein it was held that in the case of inconsistency between the
provisions of two enactments, both of which can be regarded as special in nature, the conflict
has to be resolved by reference to the purpose and policy underlying the two enactments and
the clear intendment conveyed by the language of the relevant provisions therein. Based on
such ruling, the Commission observed that both the Electricity Act, 2003 and the Competition
Act are special statutes with their designated spheres of operation. The former aims at
regulating activities in the electricity industry and the latter aims at promoting competition in

6 Case No. 05 of 2018, 4 July 2018
7 https://indiankanoon.org/doc/1561804/

every sphere and sector of the economy. The jurisdiction of the Act extends to all sectors of
the economy and sectors regulated by sector specific laws such as telecommunication,
electricity, petroleum, insurance etc. are also included within the ambit of the Act for the
competition related matters/issues. To this extent there is no conflict as both these statutes
have their respective and mutually exclusive regulatory regimes. (emphasis supplied).

30. Thus, the aforesaid excerpts from the HPCL case clarify that existence of a sectoral
regulator cannot be understood to exclude the jurisdiction of the Commission. Under the
Competition Act, the mandate of the Commission is to eliminate practices having adverse
effect on competition, promote and sustain competition, protect the interests of consumers
and ensure freedom of trade carried on by other participants, in markets in India. Sectoral
regulators have necessary technical expertise to determine access, maintain standard, ensure
safety and determine tariff. The issues relating to entry conditions, technical details, tariff,
safety standards have direct control on prices, quantity and quality primarily seems to be
within the exclusive ambit of sectoral regulators. Thus, sectoral regulators focus on the
dynamics of specific sectors, whereas the Commission focuses on functioning of the markets
by way of increasing efficiency through competition. In fact, the role played by the
Commission and the sectoral regulators are complementary and supplementary to each other
as they share the common objective of obtaining maximum benefit for the consumers.”

Hence in this case, the court referred to the HPCL case, which had spoken about the co-
existence of the CCI and the Electricity Regulator. The case served as a precedent to
elucidate about the fact that though Regulatory bodies have provisions the discourage anti-
competitive practices, it is important that the Competitive issues such as abuse of a dominant
position be left to the wisdom of Competition courts whereas the sector specific issues for
e.g.; in the PNGRB Act, the board has the power to look into registration of entities dealing
in petroleum products or fixing of prices etc. are left to the adjudicatory institutions of the
regulator.

• The Electricity Act and The Competition Commission of India

The Electricity Act, 2003 is an Act which in the legislation expressly states at many parts the
it is a regulator of competition in the electricity sector. This has been stated in contexts where

it has become evident that the Regulator has stepped into to the shoes of the Competition
Commission. Just to substantiate prima facie by looking at the Long title of the Act,

“An Act to consolidate the laws relating to generation, transmission, distribution, trading
and use of electricity and generally for taking measures conducive to development of
electricity industry, promoting competition therein, protecting interest of consumers and
supply of electricity to all areas, rationalization of electricity tariff, ensuring transparent
policies regarding subsidies, promotion of efficient and environmentally benign policies,
constitution of Central Electricity Authority, Regulatory Commissions and establishment of
Appellate Tribunal and for matters connected therewith or incidental thereto.”

In the long title, there is a reference made to promotion of competition which cannot be
construed as a controller of competition but this is the beginning of an extensive look into the
intention of the legislature to introduce such words.
Temporarily shifting the focus from the “Competition”, it is wise to look into the subject
matter of the Electricity Act. It was established to primarily regulate the supply of electricity,
fixing tariffs for the same, development of the electricity industry and also adjudicating on
disputes which may arise on the above stated subjects.

It is pertinent at this stage to direct our unequivocal attention to Section 60 of the Electricity
Act, 2003 which deals with Market domination. On prima facie reading of this, it becomes
evident that there is a foot set onto Competition Law territory. Now, just to state the provision
verbatim,

“Section 60. (Market domination): The Appropriate Commission may issue such directions
as it considers appropriate to a licensee or a generating company if such licensee or
generating company enters into any agreement or abuses its dominant position or enters into
a combination which is likely to cause or causes an adverse effect on competition in
electricity industry.”

On reading this section, it becomes evident that there is foot laid onto Competition Law
territory. The operation of this section is contingent on whether there is “abuse of dominant
position or a combination” which is likely to have an adverse effect of the industry. This has

a great resemblance to Section 4, and 6 of the Competition Act which too has the objective of
discouraging abuse of dominant position and regulation of combinations as well.

Through these sections, the issue commences on jurisdiction and where which authority holds
power to adjudicate. To illuminate on the same, the case law of In Re: HPCL-Mittal Pipelines
Limited (‘HMPL’) and Gujarat Energy Transmission Corporation Limited & Ors 8 , the
Commission had elucidated on the confict between the two acts in the following manner,

“46. Both, the EA03 and the Act, are special statutes. However, both have their designated
spheres of operation. The former aims at regulating activities in the electricity industry and
the latter aims at promoting competition in every sphere and sector of the economy. The
jurisdiction of the Act extends to all sectors of the economy and sectors regulated by sector
specific laws such as telecommunication, electricity, petroleum, insurance etc. are also
included within the ambit of the Act for the competition related matters/issues. To this extent
there is no conflict as both these statutes have their respective and mutually exclusive
regulatory regimes. This observation is in sync with the Commission’s holding in many
previous cases in the electricity sector and other regulated sectors. As observed by the
Commission in Case No. 91 of 2014 (Open Access Users Association vs. Tata Power Delhi
Distribution Limited & Ors.), the mandate of the Commission is to eliminate practices having
adverse effect on competition, promote and sustain competition, protect the interests of
consumers and ensure freedom of trade carried on by other participants, in markets in India.
Sectoral regulators have necessary technical expertise to determine access, maintain
standard, ensure safety and determine tariff. The issues relating to entry conditions, technical
details, tariff, safety standards have direct control on prices, quantity and quality primarily
seems to be within the exclusive ambit of sectoral regulators. Thus, sectoral regulators focus
on the dynamics of specific sectors, whereas the Commission focuses on functioning of the
markets by way of increasing efficiency through competition. In fact, the role played by the
Commission and the sectoral regulators are complementary and supplementary to each other
as they share the common objective of obtaining maximum benefit for the consumers.

47. Thus, the Commission is of the view that there is no issue of conflict in the present case
between the provisions of EA03 and the provisions of the Act which cannot be reconciled

8 Case No. 39 of 2017, 31/01/2018

adopting the harmonious construction. Though EA03 is a special statute for the purposes of
dealing with electricity matters, the Competition Act, 2002 is a special statute for regulating
competition in the market.”

In this case, the Commission made a clear demarcation as to the sphere the Electricity Act
will deal with and the specialisation of the Competition Act. This conclusion has greatly been
influenced by the Supreme Court Judgement in the case of Sarwan Singh & Another v.
Kasturi Lal9, where the apex court was dealing with “conflict between two statutes”. The
court held as follows,

“When two or more laws operate in the same field and each contains a non-obstante clause
stating that its provisions will over-ride those of any other law, stimulating and incisive
problems of interpretation arise. Since statutory interpretation has no conventional protocol,
cases of such conflict have to be decided in reference to the object and purpose of the laws
under consideration.”
This was reiterated in the case of Ashoka Marketing Ltd. And Anr vs Punjab National Bank
and Ors10 where the apex court was dealing with an issue of confliction laws and it had
suggested the same harmonious relationship.

Therefore, at this juncture, the harmonious existence of two legislations having overlapping
jurisdictions has been reiterated and glorified by the Apex court as well as the Commission.
Irrespective of the words in the sections, the purpose of the acts in their entirety must be
looked at so that the conflicting perspectives may slowly wither away.

• IPR Acts and The Competition Commission of India

There has indeed been an uprising debate on the conflicting nature of Intellectual Property
regulatory bodies and the Competition Commission of India. There have been multiple
instances where questions of have jurisdiction have arisen and there have been conflicting
perspectives. But in order to understand these conflicts better we must analyse a few IP

9 1977 AIR 265, 1977 SCR (2) 421
10 1991 AIR 855, 1990 SCR (3) 649

statutes, which define the roles of the bodies formed under the act and how they legislation in
totality overlaps with The Competition Act.
Firstly, The Copyright Act may be looked into. The Long Title of the Act simple states “An
Act to amend and consolidate the law relating to copyright.” This on a reading would not
suffice to come to any conclusions let alone to even draw an inference. Hence, we must dig
deeper to know the functioning of Copyright authorities. Prior to an amendment made in
2017, the Authority was called The Copyright Board. As of now, it has been substituted by
The Appellate Board.
Under Section 12 of the Copyright Act, once read, does not seem to make any express or
implied reference pertaining to the Appellate Board having the power to control competition
in the market. There is, only in subsequent provisions of the Act a mention of how the
Appellate Board has the power to look into aspects like dispute arising due to assignment of a
copyright
(Section 19A), disputes pertaining to works withheld from public (Section 31), fixing rates
for statutory license of cover version (Section 31C) etc. On a glimpse of the provisions, there
is no intention whatsoever to control competition or penalise an abuse of dominant position.
These functions are market regulatory which may be construes as control of competitive
entities in the market. To shed light on these issues, judicial interpretation may be looked
into.

In the case of In Re: M/s HT Media Limited vs M/s Super Cassettes Industries Limited11, The
jurisdictional question between Copyright Board and Competition Commission was
deliberated upon. The court held as under,

“129. Suffice to note that as per the legislative framework, the duty of the competition
authority as envisaged in section 18 of the Act is ‘……to eliminate practices having adverse
effect on competition, promote and sustain competition, protect the interests of consumers
and ensure freedom of trade carried on by other participants, in markets in India’, thereby
giving the Commission a very wide mandate. It is therefore, the duty and responsibility of the
Commission to eliminate practices in the market that have an adverse effect on competition
and to promote and sustain the competition so as to protect the interest of consumers and
ensure freedom of trade.

11 Case No. 40 of 2011, 01/10/2014

130. As observed in the earlier order, none of the areas covered under section 3 or 4 of the
Act is covered under the Copyright Act. Therefore, the powers of the Commission and
Copyright Board govern different aspects of law and the Copyright Board cannot serve as an
effective instrument for promotion of competition. The Copyright Board is a body constituted
under section 11 of the Copyright Act for the discharge of certain functions under the Act.
The main functions of the Copyright Board as per the Copyright Act include deciding
whether a work has been published or as to the date on which the work was published for the
purposes of chapter V; deciding whether the term of copyright for any work is shorter in any
other country than that of the Copyright Act; settling disputes related to assignment of
copyright; granting compulsory licenses in respect of Indian works withheld from the public;
granting compulsory licensing to publish unpublished works; granting compulsory license to
produce and publish translation of literary or dramatic works; granting compulsory licenses
to reproduce and publish certain categories of literary, scientific or artistic works for certain
purposes; addressing the complaints of the aggrieved persons or the Registrar of Copyright,
for rectification of the Register of Copyright etc. A review of the functions of the Copyright
Board reveal that while the Board obviously performs important judicial/ quasi-judicial
functions, under no circumstances can it be said that the Copyright Board is tasked with
eliminating
market practices which have an adverse effect in the market of works protected by the
Copyright Act.

131. Having said that, the Commission notes that it recognizes the role and importance of
sectoral regulators and exercises its jurisdiction keeping in mind the role of sectoral
regulators.”

In this case the Commission rejected the contentions of the Opposing Party on the question of
jurisdiction. The Commission has elaborately and definitively stated that there is no conflict
between the statutes and the areas of application indeed are different and unique.

Now to look at The Competition Act and The Patents Act. The Patent Act was established “to
amend and consolidate the law relating to patents”. This is the brief and non – descriptive
long title of the Act whose words would not suffice in enlightening a lame man on the

objectives of the legislation. To clarify, it is an Act, which regulates the grant and revocation
of patents within the territory of India. Authorities have been appointed by the Act to look
into aspects of whether an invention is Patentable or whether there has been a breach of the
same. To elaborate
We must look at few sections to know the functioning of the authorities and how it is a
regulator and overlaps with the Competition Act.
Section 83 of the Patents Act, which emphasises on the “General principles applicable to
working of patented inventions” would highlight certain functions. Under this section,
important aspects of patents like patents to be granted to encourage inventions and get them
to work in India on a commercial scale, that they are not granted merely to enable patentees
to enjoy a monopoly for the importation of the patented article, that the patent right is not
abused by the patentee or person deriving title or interest on patent from the patentee, that
patents are granted to make the benefit of the patented invention available at reasonably
affordable prices to the public etc. are regulatory as well as competition regulatory in nature.
Similarly, Section 140 of the Act talks about certain restrictive conditions. It states as
follows,
“140. Avoidance of certain restrictive conditions. -(1) It shall not be lawful to insert-
(i) in any contract for or in relation to the sale or lease of a patented article or an article
made by a patented process; or
(ii) in license to manufacture or use a patented article; or
(iii) in a licence to work any process protected by a patent, a condition the effect of which
may be-….”
In the case of Telefonaktiebolaget Lm Ericsson vs Competition Commission of India12, the
Delhi High Court had stated that Section 140, 83 etc. in their purpose had a competition
regulator essence to it. Hence an overlap was discovered and it required judicial
interpretation. The court interpreted and concluded as follows,
“107. The key question is whether provisions of the Patents Act exhausts all remedies that
are available in respect of abusive conduct by a patentee or whether an abuse of dominant
position by a patentee could also be subject matter of proceedings and orders under the
Competition Act. The aforesaid issue has to be addressed bearing in mind the objective,
express provisions and the operative legislative fields of the two enactments.”

12 W.P.(C) 464/2014 & CM Nos.911/2014 & 915/2014, 30 March 2016

The court subsequent to this examined the legislative history of both enactments and stated as
follows,
“172. It follows from the above that whilst an agreement which imposes reasonable condition
for protecting Patent Rights is permissible, an anti-competitive agreement which imposes
unreasonable conditions would not be afforded the safe harbour of Section 3(5) of the
Competition Act and would fall foul of Section 3 of the Competition Act. The question as to
whether a condition imposed under the agreement is reasonable or not would be a matter
which could only be decided by the CCI under the provisions of the Competition Act. Neither
the Controller of Patents discharging his functions in terms of the Patents Act, nor a Civil
Court would have any jurisdiction to adjudicate whether an agreement falls foul of Section 3
of the Competition Act. This is so because the Controller of Patents cannot exercise any
powers which are not specifically conferred by the Patents Act and by virtue of Section 61 of
the Competition Act, the jurisdiction of Civil Courts to entertain any suit or proceedings in
respect of any matter which the CCI or the COMPAT is empowered to determine, stands
expressly excluded. Thus, in so far as the scope of Section 3 of the Competition Act is
concerned, there does not appear to be any overlap or inconsistency with the Patents Act.

173. Facially, it may appear that the gravamen of the two enactments are intrinsically
conflicting; however, when one views the same in the perspective that patent laws define the
contours of certain rights, and the anti-trust laws are essentially to prevent abuse of rights,
the prospect of an irreconcilable conflict seems to reduce considerably.

174. In my view, there is no irreconcilable repugnancy or conflict between the Competition
Act and the Patents Act. And, in absence of any irreconcilable conflict between the two
legislations, the jurisdiction of CCI to entertain complaints for abuse of dominance in respect
of Patent rights cannot be ousted.”

Thus, from this judgement, it can be fairly inferred that when there are enactments with a
similarity of essence in some provisions, the enactments must be looked at from the broader
perspective keeping in mind the intent of the legislature and the purpose of the Statute. This
will help in greatly reducing the conflicting perceptions of these statutes and will help us
appreciate their true intent.

• Other Regulatory Authorities and The Competition Commission of India
The above stated regulators are considered to be regulators with whom the Competition
Commission is said to have jurisdictional overlaps on a regular basis. Hence the need to
highlight them first. But it is also vital to note that there are other sectoral regulators that the
Competition Commission has had regular issues with. Just to highlight a few, the
Commission has had overlapping jurisdiction questions with the Reserve Bank of India
(RBI), Airports Economic Regulatory Authority of India (AERA), Securities and Exchange
Board of India (SEBI), etc just to name a few. In all these instances, adjudicatory bodies have
resorted to a harmonious co-existence between the two bodies. In the case of Yashoda
Hospital & Research Centre Ltd vs lndia Bulls Financial Services Ltd.13, the Commission
had dealt with an issue which was the subject matter of the Competition Act. But an
argument was raise stating that since RBI is the regulator of the banking sector, it will oust
the jurisdiction of the Competition Commission. The Commission had stated that the RBI
was indeed a regulator but when the issue is pertaining to competition, irrespective of the
sector it will have the power to adjudicate. The beauty of AERA Act in this instance is that
there is a legislative restriction on matters mentioned in the Competition Act. It can be seen
in Section 17 of the AERA Act. In the case of In Re: Advocate Jitesh Maheshwari vs
National Stock Exchange of India Ltd14, The CCI surprisingly had said that it would not look
into abuse of position by the NSE as the matter was already being dealt with SEBI. But it had
stated that matters which involve an abuse of dominant position do fall within the ambit of
the Competition Act.

To sum up, The Competition Act is a legislation that lays emphasis on the Competitive nature
of market and seeks to curb any action that destroys the natural state of affairs through anti-
competitive behaviour. In functionality, the Act seeks to be a controller, regulator, guardian
and punisher for any activity that is anti-competitive. Playing such a role is vital for every
element of a market beginning from the manufacturer of a good all the way to the customer.
The presumption that anti-competitive behaviour may have catastrophic consequences
economically is a pertinent one. Hence, the function of this authority is not to be considered
as a minor one but must be looked at with a wider eye and an open mind.

13 Case No. 12 of 2010, 22 March 2011
14 Case No. 47 of 2018, 07/01/2019


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