Hindustan Times (Lucknow)

TDSAT dismisses regulator’s ruling on predatory pricing

- Navadha Pandey navadha.p@livemint.com ▪

NEWDELHI: India’s top telecom tribunal on Thursday quashed controvers­ial rules on predatory pricing, in a relief for Bharti Airtel Ltd and Vodafone Idea Ltd, which had complained that the rules would benefit rival Reliance Jio Infocomm Ltd.

The Telecom Regulatory Authority of India (Trai) had issued the new rules arbitraril­y and without deliberati­on or effective consultati­on, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) ruled. The tribunal rejected Trai’s new definition of “significan­t market player” (SMP), besides sparing telecom firms from disclosing on their websites segmented offers or tariff discounts aimed at retaining customers.

During the TDSAT hearings, the telecom firms argued that informatio­n on segmented offers were a trade secret and its disclosure would help rivals, and hence, confidenti­al informatio­n of such nature should not be asked to be disclosed.

According to the TDSAT order, instead of reporting all segmented offers/discounts, Trai may call for details of any segmented offer about which it receives complaints.

The tribunal directed Trai to reconsider provisions related to predatory pricing and segmented offers within six months, barring it from imposing any penalty on this count. “Authority is required to take fresh decision on relevant issues in case of segmented offers and whether prevailing facts and health of sector would require major changes in meaning of tariff plans,” the order said.

Trai will challenge the verdict in the Supreme Court, an official at the regulator said on condition of anonymity.

In February, Trai directed telcos to transparen­tly disclose segmented offers and set the penalty for violations at ₹5,000 for every day of delay, subject to a maximum of ₹2 lakh. Operators were required to report any new tariffs to Trai within seven working days from the date of their implementa­tion, after conducting a self-check to ensure the tariffs are transparen­t, non-discrimina­tory and non-predatory.

Moreover, under the new rules, Trai could examine tariffs of an SMP—an operator holding a share of at least 30% of total

TRAI ISSUED THE NEW RULES ARBITRARIL­Y AND WITHOUT DELIBERATI­ON OR EFFECTIVE CONSULTATI­ON, THE TRIBUNAL SAID

activity in a relevant market—to check for predatory pricing. The new definition of “total activity” was based on any of two parameters—subscriber base and gross revenue—while an earlier definition included subscriber base, revenue, switching capacity and volume of traffic. According to other operators, excluding traffic from the definition of SMP would help Jio, which enjoys huge traffic on its network.

Under the new rules, Trai had also said it would look at whether the tariff is below the firm’s average variable cost over a certain period, in addition to whether there was evidence of a specific intent to engage in predatory pricing; and if the tariff was found predatory, an operator was liable to pay a penalty of up to ₹50 lakh per tariff plan per telecom circle.

While Bharti and Idea moved TDSAT against the Trai rules, Vodafone challenged them in the Madras High Court, alleging the order would result in an unfair advantage to Reliance Jio as it took away their flexibilit­y to compete and retain customers in a circle in which they are significan­t market players.

The tribunal was sharply critical of the Trai order: “By this definition, Trai has encouraged and permitted non-SMPs to indulge in predation by creating a presumptio­n that only SMPs can be capable of predation,” it said.

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