It is with pleasure that we present the 15th edition of Spotlight to you.
This edition discusses a frequently occuring phenomenon of jurisdicttional truf-war between the Competition Commission of India and sector regulators, and also presents some ways to deal with this recurring issue.
We look forward to hearing your thoughts and suggestions.
Recurring Jurisdictional Turf-war between CCI and Sector Regulators - Towards Solution
The Recurring Problem
Sector regulators questioning the Competition Commission of India (CCI) jurisdiction to claim their fiefdom over that sector is not new. In a most recent episode, the Securities and Exchange Board of India (SEBI) asked the CCI to refrain from pursuing a matter involving allegations of collusion and predatory pricing against certain credit rating agencies (CRAs). The CCI, however, rightly rejected SEBI’s claim and continued to dispose of the matter, saying it is “well within its powers to investigate anti-trust practices”.
In 2019, Brickwork Ratings India Pvt. Ltd., a CRA, filed information with the CCI against the four leading CRAs (viz., CRISIL Ltd. India Ratings and Research Pvt. Ltd. CARE Ratings Ltd. and ICRA Ltd.; together Opposition Parties or OPs). The Informant alleged that OPs were colluding in bidding (anti-competitive agreements) to public sector utilities and were quoting a very low price (predatory pricing) to block smaller CRAs from winning these contracts.
When CCI sent the matter to SEBI for their comments, the latter stated that the Code of Conduct prescribed under the SEBI (CRA) Regulations, 1999 imposes an unequivocal obligation on the CRAs to conduct their business with high standards of integrity, dignity and fairness and not to indulge in any unfair competition. Thus, the allegations levelled attract the provisions of the 1999 Regulations, for which SEBI is the regulatory authority to examine the allegations and take appropriate action.
Therefore, as per SEBI, the present information may not be entertained by the Commission. The OPs also raised similar objections – that CCI has no jurisdiction as the subject matter – regulation of CRAs – is strictly within the domain of SEBI.
However, when SEBI did not state in its comments whether it has initiated or is initiating any inquiry on such allegations, CCI decided to proceed in the matter. CCI also relied upon a 2019 judgement of the Supreme Court. The SC in Competition Commission of India v. Bharti Airtel Limited and Others had opined that mere presence of a sectoral regulator does not oust the jurisdiction of the CCI.
Therefore, the CCI proceeded to deal with the matter. However, since no prima facie case could be established with regard to the allegations of cartel or predatory pricing, the matter was closed.
The case, however, has again raised the jurisdictional turf-wars between CCI and sectoral regulators, which have repeatedly been happening at some intervals. If some credible solution is not found, such turf-wars may increase in the future given that many new regulations are in the pipeline. Such jurisdictional conflicts and uncertainties increase investment risks and onerous, costly delays.
Recently, delivering a keynote speech during a CCI conference, NK Singh, Chairman, 15th Finance Commission, deliberated at length on the jurisdictional conflict between CCI and the sectoral regulators. Such conflict could arise due to legislative ambiguity or jurisdictional overlap, or both. Interpretational bias could aggravate such conflicts. The market players and legal arbitrators may also generate such conflicts. The tangled understanding of framers of the legislation is evident in multiple legislations.