Bombay High Court
Asianet Star Commounications ... vs Competition Commissioner Of ... on 6 April, 2022
Bench: G.S. Patel, Madhav J. Jamdar
914-916-ASWP-3755-2022.DOC
Shephali
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 3755 OF 2022
Asianet Star Communications Private Limited ...Petitioner
Versus
Competition Commissioner of India & Ors ...Respondents
WITH
WRIT PETITION NO. 3845 OF 2022
Disney Broadcasting (India) Private Limited ...Petitioner
Versus
Competition Commissioner of India & Ors ...Respondents
SHEPHALI
SANJAY
MORMARE
WITH
Digitally signed
by SHEPHALI
SANJAY
MORMARE
WRIT PETITION NO. 3860 OF 2022
Date: 2022.04.07
09:52:10 +0530
Star India Private Limited ...Petitioner
Versus
Competition Commissioner of India & Ors ...Respondents
Mr DJ Khambata, Senior Advocate, with Kunal Dwarkadas,
Rajendra Barot, Nafisa Khandeparkar, Ambareen Mujawar,
Nitin Nair, Varun Thakur, Akshay Agarwal, i/b AZB Partners,
for the Petitioner in WP/3860/2022.
Mr Musatafa Doctor, Senior Advocate, with Rajendra Barot,
Nafisa Khandeparkar, Ambareen Mujawar, Nitin Nair, Varun
Thakur, Akshay Agarwal, i/b AAB Partners, for the Petitioner in
WP/3755/2022.
Page 1 of 12
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Mr Navroz Seervai, Senior Advocate, with Avinash Amaranath,
Tarun Donadi, Nikhil Gupta & Priyanka Chaddha, i/b Wadia
Ghyandy & Co, for Respondent No. 2, in WP/3860/2022.
Mr Somsekhar Sundaresan, with Abhishek Venkatraman, Viswajit
Deb, Manu Chaturvedi, Malhar Desai Hafeez Patanwala, i/b
Juris Corp, for Respondent No. 1, in all matters.
Dr Birendra Saraf, Senior Advocate, with Pradeep Bakhru, Avinash
Amaranath, Tarun Donadi, Nikhil Gupta & Priyanka Chaddha,
i/b Wadia Ghandy & Co, for Respodnent No. 2 in WP/3755/22 &
WP/3845/2022.
Mr Rajendra Barot, with Nafisa Khandeparkar, Ambareen Mujawar,
Nitin Nair & Varun Thakur, i/b AZB Partners, for Respondents
Nos. 3 & 4, in WP/3845/2022.
CORAM G.S. Patel &
Madhav J. Jamdar, JJ.
DATED: 6th April 2022
PC:-
1. We have heard this group of matters at some length today for
admission and interim or ad-interim relief.
2. For the purposes of this ad-interim order, we will take the
facts from Writ Petition No. 3860 of 2022 (where Star India Pvt Ltd
is the Petitioner). There is a limited Affidavit in Reply on behalf of
the 2nd Respondent ("ADNPL").
3. The challenge in all these Petitions is to and an order dated
28th February 2022 issued by the Competition Commission of India
("CCI") in Case No. 9 of 2022. That order directs an investigation
under Section 26(1) of the Competition Act 2002. To understand
the contours of this, we reproduce Section 26 of the Act.:
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"Section 26: Procedure for inquiry on complaints under
section 19.--
(1) On receipt of a complaint or a reference from the
Central Government or a State Government or a statutory
authority or on its own knowledge or information, under
section 19, if the Commission is of the opinion that there
exists a prima facie case, it shall direct the Director General
to cause an investigation to be made into the matter.
(2) The Director General shall, on receipt of direction
under sub-section (1), submit a report on his findings within
such period as may be specified by the Commission.
(3) Where on receipt of a complaint under clause (a) of
sub-section (1) of section 19, the Commission is of the
opinion that there exists no prima facie case, it shall dismiss
the complaint and may pass such orders as it deems fit,
including imposition of costs, if necessary.
(4) The Commission shall forward a copy of the report
referred to in sub-section (2) to the parties concerned or to
the Central Government or the State Government or the
statutory authority, as the case may be.
(5) If the report of the Director General relates on a
complaint and such report recommends that there is no
contravention of any of the provisions of this Act, the
complainant shall be given an opportunity to rebut the
findings of the Director-General.
(6) If, after hearing the complainant, the Commission
agrees with the recommendation of the Director General, it
shall dismiss the complaint.
(7) If, after hearing the complainant, the Commission is
of the opinion that further inquiry is called for, it shall
direct the complainant to proceed with the complaint.
(8) If the report of the Director General relates on a
reference made under sub-section (1) and such report
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recommends that there is no contravention of the
provisions of this Act, the Commission shall invite
comments of the Central Government or the State
Government or the statutory authority, as the case may be,
on such report and on receipt of such comments, the
Commission shall return the reference if there is no prima
facie case or proceed with the reference as a complaint if
there is a prima facie case.
(9) If the report of the Director General referred to in
sub-section (2) recommends that there is contravention of
any of the provisions of this Act, and the Commission is of
the opinion that further inquiry is called for, it shall inquire
into such contravention in accordance with the provisions
of this Act.
4. By this order, we propose to simply hold the parties in a form
of a status quo or a neutral position until they can be heard fully
once the Court reopens after the summer recess, and once the CCI
has been given a reasonable opportunity to file an Affidavit and
submit a compilation of relevant law. We also intend to give the 2nd
Respondent, the complainant before the CCI, an opportunity to file
a further Affidavit in Reply and a compilation of documents.
5. We believe it would be appropriate to briefly set out some of
the facts and the rival contentions to provide the necessary context
for this order. We have not made any determination, even a prima
facie one as yet.
6. The Petitioners are, respectively, Asianet Star
Communications Private Limited, Disney Broadcasting (India)
Private Limited and Star India Private Limited, all major
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broadcasters and media and entertainment companies. There is no
doubt that they are covered by the Telecommunication
(Broadcasting and Cable) Services Interconnection (Addressable
Systems) Regulations 2017, a corresponding 2017 tariff order and
the Telecommunication (Broadcasting and Cable) Services
Standards of Quality of Service and Consumer Protection
Regulations 2017. This is the regulatory framework.
7. The 2nd Respondent, ADNPL, filed an application with the
CCI seeking an order under Section 26(1) of the Competition Act
2002 as also other reliefs. A copy of its application is at Exhibit "B"
at page 103. ADNPL is a Multi System Operator ("MSO"). It
provides digital TV services predominantly in Kerala but also in
Karnataka, Andhra Pradesh, Telangana and Odisha. It has been in
the business of distribution of TV channels for the better part of
three decades. It provides its digital TV services to customer
directly as also through local cable operators. It claims to have a
customer based of over 10 lakh customers in Kerala and at least 1.1
lakh customers in other territories.
8. The Petitioners broadcast satellite-based TV channels. Each
has multiple channels in different languages and in various genres.
ADNPL receives broadcasting signals from these broadcasters.
ADNPL and the Petitioners have had a commercial business
relationship for nearly two decades.
9. According to the regulations and the decisions of the Telecom
Regulatory Authority of India ("TRAI") and the Telecom Disputes
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Settlement and Appellate Tribunal ("TDSAT"), broadcasters
(such as the Petitioners) must not have discriminatory pricing in
commercial contracts with multi service operators. Crucial to this
entire construct is a concept of 'interconnectivity'. The current
regulatory framework after 2017 has a concept of a maximum retail
price. The 2017 Regulations inter alia cap discounts and distribution
fees payable to distributors. They apparently mandate, according to
ADNPL, that broadcasters must offer discounts on fair, transparent
and non-discriminatory terms.
10. ADNPL says that it has frequently had to seek legal redress
because of various discriminatory acts on the part of the Petitioners.
The Petitioners deny these entirely and point out that ADNPL has
not yet obtained any orders in its favour. We will consider all these
contentions at a later date.
11. We do not propose to set out the entirety of the present
complaint. The submission by ADNPL before the CCI was that the
Petitioners are all in 'positions of dominance'. They abused this
position of dominance by providing to a direct competitor of
ADNPL in Kerala, one Kerala Communicators Cables Limited
("KCCL") significant discounts though these were indirectly
buried in the form of allied agreements that apparently offered a
cashback system. Whether this is or is not correct is yet to be
determined. ADNPL seems to have said to CCI that the agreements
were intended to bypass the TRAI/TDSAT-set caps or upper limits,
or to subvert them, and to that extent were shame or bogus
agreements only ostensibly complying or being in accordance to
what was permissible but actually designed to provide unfair
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advantage ADNPL's competitor, KCCL. This resulted in a massive
erosion of ADNPL's customer-base.
12. This was the complaint to which CCI tribunal applied its
mind. The impugned order in question is at Exhibit "A". In
paragraph 9 this is how the CCI summarised the case before it.
"9. It was stated by the Informant that, to circumvent
the New Regulatory Framework and grant additional
discriminatory discounts to KCCL, OP-1 has entered into
marketing agreements with KCCL whereby OP-1 pays
KCCL for advertising which apparently is an admitted fact
by OP-1 in one of its communications. It is also averred that
it is claimed by OP-1 that the subscription agreement and
marketing agreement are two independent transactions and
that ADNPL is attempting to link two different transactions
with mala fide intentions."
13. We reproduce only three paragraphs of the order at this stage.
"14. The Commission has considered the Information
and other material available on record. Based on the
averments and allegations made in the Information, it is
observed that the main thrust of the allegations levelled by
the Informant is that by offering additional discounts to
select MSOs and the main competitor of ADNPL in Kerala
viz. KCCL, OP-1 has placed the MSOs like ADNPL at a
huge disadvantage which is detrimental to the competition
and competitors in the market. Such conduct by a dominant
player is alleged to be violative of the provisions of Section
4 of the Act as it not only amounts to imposition of
unfair/discriminatory prices but also denies market access
to the Informant besides distorting the level playing field in
the market place and hindering the ability of the players to
complete in an effective manner.
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18. While adverting to the alleged abuse of dominance
perpetrated by the Ops, it is averred in the Information that
OP-1 was providing a bouquet of channels to the competitor
of the Informant at lesser prices resulting into denial of
market access and also amounting to unfair/ discriminatory
pricing. Apparently, KCCL was getting the channels at
about 30% of the MRP with about 70% discount (special
discounts of up to 50% added with distribution fee of 20%)
whereas the maximum permissible discounts under the
New Regulatory Framework is capped at 35%, i.e., a
minimum of 20% distribution fee and other marketing
discounts of maximum 15% (combined, both capped at 35%).
As per the allegation, OP-1 chose an indirect way to provide
these discounts to circumvent the New Regulatory
Framework by way of promotion and advertisement
payments to KCCL through high valued advertising deals.
19. The resultant impact was that the Informant was
constrained to price its channels at a higher price than that
of KCCL and ultimately pay the price by losing consumers
consistently whereas KCCL has gained new consumers.
The Informant was ultimately offering its services at a loss-
making price just to prevent the subscriber base from
migrating to KCCL's services but in a vain. It is stated that
ADNPL's subscriber base fell from about 14.5 lakh in April
2019 to about 11.76 lakh in September 2021 while the
subscriber base KCCL went up from 21.3 lakh in April 2019
to 29.35 lakh in September 2021.Therefore , the alleged
discriminatory conduct of price discrimination between
different MSOs of OP-1 has resulted into significant loss in
the consumer base of the Informant and therefore prima
facie appears to be in violation of the provisions of Section
4(2)(a)(ii) of the Act as also in contravention of the
provisions of Section 4(2)(c) of the Act due to
discriminatory pricing and denial of market access
respectively."
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14. In view of this, the CCI directed the Director General to
cause an investigation to be made into the matter and submit an
investigation report within 60 days. He was to do so without being
influenced by any observations in the CCI's order.
15. Mr Khambata's submission for the Petitioners are on several
counts. He maintains that the impugned order is entirely bad and
cannot be sustained. Before that, Mr Sundaresan on before of the
CCI raises a preliminary point of the jurisdiction of this Court. We
have heard him and Mr Khambata briefly on this. Today we leave
that jurisdictional question entirely open for decision at a later date.
We are not expressing a prima facie view.
16. As to the order itself, Mr Khambata draws our attention inter
alia to the decision of the Supreme Court in Competition Commission
of India v Bharti Airtel Limited and Ors. 1 He does so to submit that a
complaint of the nature presented by the 2nd Respondent must be
first placed before the TDSAT and cannot be placed before the CCI
directly. The Bharti Airtel judgment has been followed or applied,
Mr Sundaresan says, by various Courts and the formulation by Mr
Khambata is, in his submission, inaccurate given the nature of the
complaint that the CCI before it. Specifically, there is no universal
pre-condition that every complaint under the Competition Act
against a broadcaster must be filtered through the TDSAT. Indeed,
the judgment itself indicates to the contrary.
1 2019 (2) SCC 521.
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17. Mr Sundaresan is supported in his submissions quite
vigorously by Mr Seervai, who maintains that Mr Khambata's
reading of his complaint is entirely wrong. All that ADNPL said is
that while the TRAI/TDSAT established certain norms or
standards, the Petitioners have been attempting to subvert them.
There are no questions of 'interconnectivity' or 'Points of
Interconnectivity' (POIs) that need to be decided by TDSAT. The
only question is of discrimination to the disadvantage of the
complainant. ADNPL's stand is that the Petitioners have given
KCCL additional discounts over and above the maximum permitted
by TRAI/TDSAT, but these have been disguised in marketing and
advertising agreements. This, Mr Seervai says, falls squarely within
the meaning of Section 4 of the Competition Act 2002; hence the
complaint. This has nothing at all to do with the remit of the
TDSAT. Mr Seervai submits that Dr Justice Sikri's judgment in
Bharti Airtel did not say that every single complaint against a
broadcaster had perforce to be routed first to the TDSAT, nor did it
say that the TDSAT would first have to disclaim jurisdiction, after
which alone could the CCI exercise its jurisdiction. Mr Seervai
maintains that the Petitioners' agreements with KCCL are sham and
bogus, but this has been clearly spelt out to mean that they are
attempts to bypass TDSAT-mandated caps or norms. That does not
mean TDSAT has to first adjudicate the issue.
18. Further, both Mr Seervai and Mr Sundaresan also point out
that at this stage CCI has not directed anything except information-
gathering or data-collection.
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19. We believe that CCI must be afforded an opportunity of
placing its case fully before the Court. ADNPL too may wish to
place a law or to file a further Affidavit. Annexed to the Petitions,
after all, is only the body of its complaint. That complaint before the
CCI was supported by quite voluminous material that is not before
us today.
20. We will hold the matter over to the 8th June 2022 when it will
be placed high on the supplementary board for directions so that we
can fix a date for final disposal at the admission stage. CCI will file
its Affidavit in Reply and compilation of documents by 7th May
2022. By that date any further Affidavit in Reply by the complainant
must also be filed. We will permit a Rejoinder by 3rd June 2022.
21. In the meantime, the Petitioners in all three cases will, on a
without-prejudice and no-equities basis, furnish to the Director
General such documentary material and information as he has called
for or in response to his queries. The CCI is not to pass any further
orders or to adjudicate further on the 2nd Respondent's complaint
until further orders of the Court. The CCI is not to permit or direct
any coercive actions against the Petitioners until the next date. This
order will operate until 8th June 2022.
22. The information collected by the Director General is to be
kept confidential as specifically required by law.
23. In particular, the information and documents supplied to the
Director General (and to him alone) under are not to be shared with
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or used by the 2nd Respondent in any manner until the next date.
Mr Sundaresan assures us that there is no question of the 2nd
Respondent being given access to the documents and information at
this stage.
24. List the matters on 8th June 2022, for directions on the
supplementary board.
(Madhav J. Jamdar, J) (G. S. Patel, J)
6th April 2022
