Kerala HC backs CCI probe into Star India, says anti-trust conduct not protected by regulatory overlap claims

TRAI's jurisdiction is limited to breaches of licensing conditions, the court said

In a significant judgment delivered on May 28, the Kerala high court has firmly upheld the jurisdiction of the Competition Commission of India (CCI) to investigate allegations of abuse of dominance in the broadcasting sector, dismissing petitions filed by Asianet Star Communications Private Ltd, Star India Private Ltd, and Disney Broadcasting (India) Private Ltd.

This precedent-setting ruling clarifies the interface between the sectoral regulator, the Telecom Regulatory Authority of India (TRAI), and the market regulator, the CCI, asserting that anti-competitive conduct cannot be shielded by claims of regulatory overlap.

The petitions challenged a CCI order that directed an investigation into complaints by Asianet Digital Network Private Ltd (ADNPL), a multi-system operator (MSO) in Kerala. ADNPL had alleged that Star India offered discriminatory discounts to Kerala Communicators Cable Ltd (KCCL), a rival MSO, through "sham marketing agreements," thereby distorting competition and violating the Competition Act.

Specifically, ADNPL claimed that Star India provided discounts of up to 50 percent to KCCL, significantly exceeding the 15 percent discount and 20 percent distribution fee prescribed by TRAI's Interconnection Regulation 2017. These additional benefits were allegedly masked as payments for advertising on a "Test" channel with no real viewership, serving to circumvent the regulatory framework and unfairly disadvantage ADNPL.

Asianet Star Communications Private Ltd, Star India Private Ltd, and Disney Broadcasting (India) Private Ltd contended that the issues fell under TRAI's exclusive domain, arguing that the CCI could not examine the matter without TRAI first determining compliance with broadcasting regulations. They maintained that the TRAI Act is a complete code for regulating broadcasting activities, including competition aspects, and therefore, only TRAI, as the sectoral regulator, should have jurisdiction over alleged breaches of its regulatory framework.

However, the High Court rejected this argument, emphasising the distinct yet complementary roles of the two authorities. The court clarified that while TRAI regulates licensing and interconnection, the CCI's mandate extends to preventing abuse of dominance and ensuring market fairness, particularly in areas beyond TRAI's regulatory purview, such as post-interconnection marketing practices.

The judgment emphasised that the CCI's focus is on "end-consumer harm and market fairness," which goes beyond TRAI's remit. The court noted that TRAI's jurisdiction is limited to breaches of licensing conditions, and it does not possess the power to examine transactions from a competition law perspective, especially concerning the abuse of dominant position.

The high court also observed that accepting the contentions would mean that "every transaction involving a sectoral regulator would be outside the ambit of inquiry under the Competition Act, even though such a sectoral regulator is not vested with the powers to examine the transactions from a Competition Law perspective".

This ruling reinforces the principle that while sectoral regulators like TRAI set the operational framework, the CCI retains its authority to address anti-competitive practices that impact the broader market and consumer interest, even within regulated sectors.

Consequently, the court dismissed the writ petitions, remitting the matter back to the CCI and granting the petitioners the liberty to address their arguments on jurisdiction before the CCI.