M/S FAST WAY TRANSMISSION CASE: A WIDER IMPORT FOR SECTION 4(2)(C) OF THE ACT

– Kritika Dobhal[1]

In the recent development, the Supreme Court of India (Court) gave a wider import to the definition of denial of access as a way of abuse of dominance. This judgment was given by a single- judge bench of the Court while hearing an appeal by the Competition Commission of India (CCI) as against the judgment given by Competition Appellate Tribunal (COMPAT).

I.     Factual Background

An information was filed before CCI by broadcaster –Kansan New Pvt Ltd (the informant) against five parties. The informant runs a news and current affairs TV channel named ‘Day and Night News’. The parties are Multi System Operators (MSOs) operating in Punjab and Chandigarh. The major contention of the informant was that the parties have acted in a cartel and have adversely affected the competition, thus violating Section 3 of the Competition Act, 2002 (Act). The parties have abused the dominance by illegally and simultaneously terminating agreement with the informant for carriage of channels. In terminating the agreement, the parties have denied market access to the channel and violated section 4 of the Act.

II.     CCI Verdict[2]

The four issues before CCI were:

  • What is the relevant market in the case?

CCI delineated the relevant product market to cable TV services. It was noted that cable TV is not perfectly substitutable by DTH and other platforms as there is a difference in technology, scalability, viewing experience and reach. The relevant geographical market was recognized as Punjab and Chandigarh on basis of local specification requirements, consumer preferences, communication language, and distribution network.

  • Whether the opposite parties are dominant in the relevant market?

CCI observed that Parties 1, 2, 3, and 5 can be said to be a part of a group [hereinafter “the Opposite Party Group”] within the meaning of Explanation (b) to Section 5 of the Act.

With respect dominance under Section 19(4) of the Act, it was noted that in terms of the number of subscribers, the Opposite Party Group has a market share of 85%. Even in of size and resources, it is bigger and advantageous as compared to its competitors. The consumers have no substitute to shift and have no say in selection, quality or band of channels. Hence, it was concluded that due to factors including market share, market power, ability to operate independent of competitive forces as well as the power to tilt the relevant market, competitors and consumers in its favor, shows the dominance of the opposite party group.

  • Whether they have abused the dominance?

The grounds submitted by DG for abuse of dominance were:

  1. Unfair and discriminatory conditions on broadcasters and Last Mile Cable Operators (LCO) under section 4(2)(a)(i) of the Act.
  2. Limiting and restricting services in Cable TV for broadcasters and consumers under section 4(2)(b)(i) of the Act.
  3. Denying market access to broadcasters and other stakeholders under section 4(2)(c) of the Act.

The first two grounds were rejected. While dealing with the denial of market access, CCI observed that the Opposite Party Group has never terminated an agreement before the due date. The contention that there was no demand for informant’s channel was also rejected. Further, it was noted that the informant was dependent on the Opposite Party Group for transmission of its channel. The termination of agreement has denied the informant access to the market as every broadcaster, including the informant, is dependent on the Opposite Party Group. It is also a denial of services to the consumer. Hence, the Opposite Party Group was held in violation of Section 4(2)(c) of the Act.

  • Whether they have violated the provision of Section 3 of the Act?

CCI observed that there is no agreement of anti-competitive nature under Section 3(3) of the Act, it cannot be said that there was formation of a Cartel. Further, there is no question of refusal to deal under Section 3(4)(d) as the entities are on different levels of the supply chain.

III.     COMPAT Verdict[3]

The only question before COMPAT was whether there has been any abuse of dominance under Section 4(2)(c) of the Act. It was noted that a denial of market access can only be occasioned to a competitor. The basis of this provision is to provide an open and level playing field to competitors. If the players are at different levels of supply chain, they are not competing and it cannot be said that there is denial of market access to other. Further, even if they were competitors, it cannot be proved that the impact was due to the Opposite Party Group’s practice. Practice, as defined under Section 2(m) of the Act, doesn’t involve termination of contract. Hence, the judgment of CCI was overruled.

IV.     Court Verdict[4]

The Court, while dealing with the matter, took into account the preamble and all the relevant provisions of the Act. It was submitted by CCI that COMPAT had taken a constricted approach which might hinder the functioning of the commission in achieving its true purpose. The Court observed that there is a duty to eliminate practices which have an adverse impact on competition and a positive duty to promote and sustain competition, apart from protecting the interests of consumers. It was noted that the words ‘in any manner’, as a part of Section 4(2) (c), is of wide import. It is irrelevant whether they are competitors, as long as the dominant position has been set out. The broadcaster was denied market access due to unlawful termination of market.

However, the Court also set aside the penalty imposed by CCI on the Other Party Group. The Court concluded that the findings of the CCI were wrong as the TRP ratings of the Channel were infact law. Thus, even when the termination of agreement was in abuse of dominance, it wasn’t without reason. Hence, the penalty imposed was set aside

V.     Analysis

CCI vs. Sectoral Regulator

One of the major contentions raised by the Opposite Party Group before CCI, COMPAT and the Court is that the matter is of commercial nature. It was argued that the relations between the broadcaster and the MSO were governed by the Telecommunication Regulations. Before the Court, it was argued that the Telecom Disputes and Settlement Appellate Tribunal (TDSAT) had vide its judgment already held the termination of agreement was unlawful as the provisions for termination was not abided by.

CCI did not delve into the matter of jurisdiction of sectoral regulator. COMPAT, on the other hand, did not feel the need to discuss demarcating the area of operation of sectoral regulators as it already overruled the order of CCI. The Court, implicitly upheld CCI’s jurisdiction to protect and promote competition. “Section 60 then gives the Act overriding effect over other statutes in case of a clash between the Act and such statues to effectuate the policy of the Act, keeping in view the economic development of the country as a whole.”

There is still lack of clarity on the matter of conflict of jurisdiction between sectoral regulators and CCI.

A Holistic Approach

The Supreme Court, in giving the judgment, has freed CCI from the narrow approach given by COMPAT. By looking at the preamble, purpose of the Act, and the role of CCI in protecting and promoting competition, the Court has rightly taken a wider, more holistic approach. In giving a wide interpretation of the term ‘in any manner’, the Court laid the idea of substance over form in dealing with Competition matters.

[1] 3rd year student, B.A. LL.B. (Hons.), National Law University, Jodhpur (Rajasthan).

[2] CCI, Case No, 36/2011 [Date of Order 03.07.2012].

[3] M/S. Fast Way Transmission Pvt. Ltd. and Others Vs. Kansan News Pvt. Ltd. and Another, Appeal No. 116/2012.

[4] CCI vs. M/S. Fast Way Transmission Pvt. Ltd. and Others, Civil Appeal No. 7215/2014.

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