Omkar Upadhyay*
Background: Vesting Of Power in Maritime Port Regulatory Authority to Adjudicate Anti-Competitiveness
The Ministry of Ports, Shipping and Waterways has floated the draft of the Indian Ports Bill), 2020[1](hereinafter referred to as the “Bill” for brevity which seeks to overhaul and replace the existing enactment[2] concerning the ports. The draft bill, as are the views of the Ministry, will be a game changer in the Indian maritime sector ushering in investments.[3] The current proposal seeks to constitute a regulatory authority, to be known as the Maritime Port Regulatory Authority[4] (hereinafter referred to as “MPRA” for brevity) which would serve as an overseer of the maritime sector having both, reactive (when a dispute is brought before it) and proactive (as a regulator) approach. The powers which hitherto have been in the hands of the government[5] have now been delegated to MPRA to ensure efficiency and efficacy. Apart from plethora of powers and functions vested in the MPRA, one particularly interesting transformation has been made by divesting the power to keep check on anti-competitive activities on the ports, a forte hitherto enjoyed by the Competition Commission of India (hereinafter referred to as “C.C.I.” for brevity). The MPRA has not only been tasked with promoting and facilitating competitiveness of ports, a regulatory work, but has also been empowered to receive and resolve disputes pertaining to anti-competitiveness or abuse of dominant position.[6]Such a conundrum is not novel to legal realm but what is of particularly piquing nature is the disregard of the government is divesting the C.C.I., though not expressly but by necessary implication, of its jurisdiction to adjudicate upon the abuse of dominant position and anti-competitiveness and also a disregard to the judicial pronouncements which have earlier adjudicated upon the quandary between the jurisdictions of sectoral regulators and the C.C.I. outlining, limiting and delimiting their respective jurisdictions. This article is therefore an attempt to bring to fore the possible chaos which would rein if the draft Indian Ports Bill is given affect before tweaking its current provisions in consonance with the settled legal and judicial principles.
Competition Law Issues in the Indian Maritime Sector: Position Hitherto
The Indian maritime sector, particularly the ports sector, the relevant market here, can be characterized by presence of major and minor players[7], and amongst them, national and international players.[8]As per latest available statistics, there are 12 major and 205 minor and intermediate ports operating in Indian marine sector.[9] Thus, the risk of abuse of dominance is two-pronged in the Indian ports sector; firstly from major ports, and secondly, from international players. Further, the competition between the ports can be categorized as either being tariff based, or cargo based.
Further, the ports sector has largely been dominated by the Government, however, several policy initiatives of the past decade have attempted to usher in more private participation. The increased private participation, though outwardly hints at greater entry in the ports sector, is bound to to create more competition issues and in the opinion of the author, the competition would shift from cargo based to tariff based. Such competitiveness requires an overseer to not only protect the consumer interests, but also the minor and regional ports from being side-lined at the hands of major and international ports.
The Blurring Line Between Sectoral Regulator And C.C.I. : The Current Position
The C.C.I., established by the Competition Act, 2002[10] (hereinafter referred to as “Act” for brevity)is entrusted with preventing and eliminating those economic activities which adversely affects the competition in the market, keep monopolization at bay and ensuring a free market in the interest of the consumers and the economy as a whole.[11] The C.C.I. in its exercise of functions is entitled to inquire into the alleged contravention of the provisions of the Act.[12] Nonetheless, various disputes have arose in the past wherein an overlap between sectoral regulator and C.C.I. has been witnessed. This has been particularly so wherein the regulators of specific sectors such as electricity, telecommunication etc. have claimed that their respective enactments are exhaustive to deal with the anti-competitive practices and thus C.C.I. has no jurisdiction to stretch its tentacles within that particular sector. For instance in Amir khan productions Ltd. v. C.C.I.[13], a case concerning allegations of anti-competitive activities on part of certain film production companies, objections were raised on C.C.I.’s jurisdiction since the respondents argued that it was a matter related to copyright issues and the appropriate authority would be Director-General. However, Bombay High Court upheld the jurisdiction of C.C.I. to proceed with investigations. Similarly, in Re HPCL-Mittal Pipelines Limited[14]before the C.C.I., it was contented that when a reference has been made alleging abuse of dominant position, the appropriate forum for resolution would be the sectoral regulator. The C.C.I., when confronted with the argument that since their already exists a special statute the Act would not apply, it stated that the Act is itself a special statute to promote and regulate coemption in the market and thus C.C.I.’s jurisdiction will not be ousted by virtue of presence of a sectoral regulator.
C.C.I. v. Bharti Airtel : Settling the Unsettled
It was not long before the Supreme Court (SC) also has to consider the tussle between the two bodies and their allegedly overlapping jurisdiction. In C.C.I. v. Bharti Airtel Ltd.[15] (“Bharti Airtel”), Reliance Jio Infocom made a representation before the Telecom Regulatory Authority of India (hereinafter referred to as “TRAI” for brevity) alleging collusion on the part of three other Telecom Service Providers (“TSPs”) and thus forming a cartel and engaging in anti-competitive practices with aid of Cellular Operators’ Association of India (“COAI”). When the C.C.I. ordered for an inquiry into the matter, TSP and COAI approached the Bombay High Court challenging the jurisdiction of the C.C.I. in doing what it did. After the Bombay High Court refused to set interfere with C.C.I.’s order, the aggrieved approached SC and thus the case arose. When confronted with the overlapping jurisdiction of TRAI, a sectoral regulator and C.C.I., a market regulator, the court adopted a harmonious and conciliatory approach and stated that TRAI merely has jurisdiction to undertake a prima facie investigation and if the facts hints of anti-competitiveness then the matter has to be dealt by the C.C.I. in the words of the SC, “our analysis does not bar the jurisdiction of CCI altogether but only pushes it to a later stage, after the TRAI has undertaken necessary exercise in the first place, which it is more suitable to carry out.”[16] Thus, the SC has settled the proposition on the conundrum that though the sectoral regulator has the expertise to deal with various sector specific issues, but when it comes to a dispute involving questions of competition issues, it is the C.C.I. which enjoys primacy, with sectoral regulator playing a complimentary rather than supplementary role.
Monsanto Holdings Pvt. Ltd. v. C.C..I: Unsettling the Settled
In 2020, before the Delhi High Court, this tussle of jurisdiction was again revitalized in the case of Monsanto Holdings Pvt. Ltd. v. CC.I.[17] (“Monsanto”). The dispute concerned, apart from other issues, questions on the alleged overlapping of jurisdiction of patents Controller under the Patents Act, 1970[18]. The allegations against the petitioner, who approached the court challenging the jurisdiction of C.C.I. were regarding abuse of its dominant position in the market of genetically modified seeds by way of incorporating onerous and lopsided terms and conditions in sub-licensing agreements. When the C.C.I. ordered an investigation the contention was raised that it is the Patents Controller, a sectoral regulator, which has the jurisdiction to look into the matter. The petitioners based their reasonings on Bharti Airtel and argued that like TRAI, it must be the Patents Controller which must determine the jurisdictional facts before C.C.I. invokes its jurisdiction.
The High Court, in a rather strange pronouncement stated that Bharti Airtel would not apply to the facts of the present case. In the court’s words, the judgement was “not an authority for the proposition that whenever there is a statutory regulator, the complaint must be first brought before the Regulator and examination of a complaint by the C.C.I. is contingent on the findings of the Regulator.” In the humble opinion of the author, the reasonings seems to be flawed and made in disregard and ill-conceived understanding of the Apex Court’s express decision. In holding that the judgement given by the same court, wherein it was held that there is no repugnancy between Patents Act and Act and that the latter would prevail in event of allegations of anti-competitive practices[19], no longer holds good after Bharti Airtel and thus it is the Patent Act which would prevail with the Act taking a back seat.
What shall be the Way Ahead?: Concluding Remarks
The Bill, 2020 has certainly erred in conferring excessive jurisdiction to MPRA as far as competition law issues are concerned. As per Bharti Airtel, a reasoning which must be upheld and followed, the only work of the sectoral regulator, in this case the MPRA, must be to determine the jurisdictional facts and then transfer the matter to C.C.I., but the Bill however goes few steps beyond, certainly not in the right direction, in conferring adjudicatory powers too on MPRA. This certainly goes against the established judicial precedent. It further takes a leap by stating that in adjudicating such issues of anti-competitiveness at the ports, it must have the same powers as that of C.C.I. This clearly makes the C.C.I. a redundant body in so far as the Indian ports and shipping industry is concerned and affects its sector neutrality.
In the opinion of the author, the sectoral regulator, as the name suggests, must have a circumscribed role, which shall be limited to only promoting efficiency of the relevant sector and adjudicating disputes resulting from contravention of the concerned governing statute. The vesting of power to adjudicate issues of competition law in MPRA would have two pronged effect; firstly, it would render the C.C.I. a toothless tiger in so far as the maritime sector is concerned, and secondly, it would amount to vesting too much of power in the MPRA, which may cause it to function ineffectively. The way ahead therefore shall be to tweak the current provisions of the draft bill and follow the conciliatory approach of Bharti Airtel not only in letter, but also in spirit (which the Delhi High Court failed to do). The MPRA’s authority must therefore be limited to only ascertain the jurisdictional issues and if a prima facie case is made out wherein there are hints of anti-competitiveness or abuse of dominance, then such matter shall be referred to C.C.I.
About the Author
Omkar Upadhyay is a third year law student at Maharashtra National Law University, Nagpur.
[1] Indian Ports Bill, 2020.
[2] The Indian Ports Act, 1908, No. 15, Actsof Parliament, 1908 (India).
[3]https://pib.gov.in/PressReleseDetailm.aspx?PRID=1679974.
[4] Indian Ports Bill, 2020, §7.
[5]Cornelius Dube &KripiSarawgi, Competition and Regulation in the Indian Port Sector, 7, CUTS C-CIER, 2010.
[6] Indian Ports Bill, 2020, § 9(2)(a) and (c).
[7]CORNELIUS DUBE, supra note 5.
[8]Growing Importance of the Competition Commission of India and Impact of the Competition Law: Issues to be Watchful of in the Indian Shipping and Maritime Logistics Industry, Deloitte, available at: https://www2.deloitte.com/content/dam/Deloitte/in/Documents/finance/in-fa-growing-importance-of-competitition-commission-noexp.pdf.
[9]Shipping Industry and Ports in India, India Brand Equity Foundation, available at:https://www.ibef.org/industry/ports-india-shipping.aspx#:~:text=In%20FY20%2C%20major%20ports%20in,annum%20(MTPA)%20in%20FY19P.
[10] The Competition Act, 2002, No. 12, Acts of Parliament, 2003 (India).
[11] The Competition Act, 2002, § 18, No. 12, Acts of Parliament, 2003 (India).
[12] The Competition Act, 2002, § 19, No. 12, Acts of Parliament, 2003 (India).
[13] (2011) 1 BomCR 802.
[14] Appeal No. 33 of 2016 decided on 16.02.2017.
[15] (2019) 2 SCC 521.
[16]Id. ¶ 92.
[17] (2020) 116 taxmann.com 715 (Delhi).
[18] The Patents Act, 1970, No. 10, Acts of Parliament, 1970 (India).
[19]Telefonaktiebolage L.M. Ericsson v. C.C.I. [2016] 67 taxmann.com 378 (Delhi).
Centre for Maritime Law 