Supreme Court Refuses To Interfere With Kerala High Court Order Allowing CCI Probe Against Jiostar

The Supreme Court on Tuesday declined to interfere with a Kerala High Court ruling that permitted the Competition Commission of India (CCI) to investigate allegations that Jiostar India Private Limited abused its dominant position through discriminatory pricing in the Kerala cable television broadcasting market, even though the sector is regulated by the Telecom Regulatory Authority of India (TRAI).

A bench of Justices J.B. Pardiwala and Sandeep Mehta dismissed a special leave petition filed by Jiostar India, formerly Star India saying that it needs to be looked into. "It is only at preliminary stage...It needs to be looked into", the bench said.

Senior Advocate Mukul Rohtagi, appearing for Jiostar, submitted that what needs to be looked into is whether matters covered by another sectoral regulator can be investigated by CCI. He added that there is already a Bombay High Court judgment in its favour. The court, however, refused to stay the investigation at this stage, observing that the investigation is only at the nascent stage.

The dispute traces back to a complaint filed before the CCI in January 2022. The complaint was filed by Asianet Digital Network Private Limited, a Kerala-based multi-system operator.

Asianet alleged that Jiostar had extended special discounts to Kerala Communicators Cable Ltd through marketing agreements. According to Asianet, the discounts exceeded the 35% cap prescribed under the 2017 TRAI Regulations. It claimed the arrangements allowed Kerala Communicators Cable Ltd. to offer Jiostar channels at significantly lower rates.

Asianet alleged denial of market access and loss of subscribers. It said the conduct amounted to discriminatory pricing and abuse of dominance.

After examining the information, the CCI formed a prima facie view that the allegations warranted investigation. By an order dated February 28, 2022, it directed its Director General to carry out a probe.

Jiostar challenged this direction before the Kerala High Court. It argued that pricing, discounts, and commercial arrangements fall within the exclusive domain of TRAI. It relied on the Supreme Court's 2019 ruling in CCI v. Bharti Airtel to contend that the CCI lacked jurisdiction and had acted prematurely.

Asianet countered that its grievance was not about regulatory violations but about anti-competitive conduct. It pointed out that no complaint was pending before TRAI.

The CCI also defended its order. It submitted that a direction under Section 26(1) of the Competition Act is administrative in nature and does not require a pre-decisional hearing. It further argued that the Competition Act and the TRAI Act operate in different fields and can function in parallel.

A Single Judge of the High Court, by an order dated May 28, refused to interfere with the CCI's investigation. Jiostar carried the matter in appeal.

On December 3, a Division Bench of Justices Sushrut Arvind Dharmadhikari and Syam Kumar V.M. upheld the Single Judge's order. The Bench held that the Competition Act is an independent special enactment dealing with anti-competitive practices and operates unhindered by the TRAI Act.

The court observed that Parliament had not placed any built-in restriction on the powers of either authority. It held that both statutes were intended to function without conflict.

The bench had noted that the allegations were not confined to violations of licence conditions or TRAI regulations. They related to discriminatory conduct and restrictive commercial agreements. It also observed that the 2017 TRAI Regulations did not regulate the marketing agreements in question.

It held that when allegations of anti-competitive practices arise, the CCI has independent authority to investigate them. The court also accepted that a Section 26(1) direction is administrative and does not entail civil consequences.

The appeal was dismissed. The High Court directed the CCI to complete the process arising from the Director General's report within eight weeks and pass a reasoned order after hearing all stakeholders.