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In a major relief to telecom operators such as Bharti Airtel and Vodafone Idea, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) on Thursday quashed the provisions related to predatory pricing and discounted tariffs issued by the Telecom Regulatory Authority of India (TRAI) through an order issued in February. Bharti Airtel and Vodafone Idea had challenged the amendment made by TRAI in the Telecommunication Tariff Order (TTO) in March. The TDSAT order comes at time when the telecom major are planning to roll out minimum recharge plans starting at ₹35.
TDSAT also said TRAI cannot impose penalty, and has asked the regulator to reconsider the provisions within the next six months.
₹50 lakh penalty
In February, TRAI had said it would impose financial disincentive of up to ₹50 lakh per circle on operators if their service rates are found to be predatory in nature. “TRAI shall keep all the relevant facts in mind while dealing with the matter in the light of this order of remand of the issues relating to non-predation and SMP (significant market player). The interim order is made absolute,” the TDSAT Bench comprising Justice SK Singh and member AK Bhargava said in the order. The amendment was issued after incumbent operators — Airtel, Vodafone and Idea — moved the court alleging that the new entrant Reliance Jio is offering services at predatory rates.
TRAI’s rule considered a tariff predatory if in a “relevant market” a telecom operator with over 30 per cent market share offers services at a price which is below the average “variable cost”, with a view to reducing competition or eliminating the competitors. “If a new entrant needs to be protected from the rigours of non-predation, it can be done through provisions like ‘welcome offer’ and promotional scheme as availed recently by Reliance Jio. These can be formalised as just exceptions but to allow freedom from requirements of non-predation till acquisition of 30 per cent total activity in a given market prima facie appears to be an extreme step and unnecessary abdication of its regulatory powers by TRAI in the context of tariff conditions and their enforcement,” TDSAT observed.
With just exceptions, the tariff conditions should generally be applicable to all service providers uniformly, it added.
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